Crude eases to $113, storm threat subsides


Crude eases to $113, storm threat subsides

LONDON - Oil eased to $113 a barrel on Monday as worries of a supply threat from tropical storm Fay to oil and gas production in the Gulf of Mexico subsided.

By (Reuters)

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Published: Mon 18 Aug 2008, 7:01 PM

Last updated: Sun 5 Apr 2015, 11:54 AM

Shell and Marathon pulled non-essential workers from the eastern and central Gulf of Mexico due to the storm threat, but offshore production was unaffected, the companies said on Sunday.

U.S. crude fell 42 cents to $113.35 a barrel by 1205 GMT, off an intra-day high of $115.35. It settled down $1.24 at $113.77l on Friday, after dipping to $111.34, the lowest since May 1.

London Brent crude fell 46 cents cents to $112.09.

'The sentiment is still very bearish,' said John Kemp, economist at RBS Sempra. 'What you see are a series of what would otherwise be bullish news stories -- whether it is the conflict between Russia and Georgia and now the report that the transit rail line across Georgia has been damaged -- failing to produce sustained rallies,' he said.

'The hurricane is largely irrelevant, there is no shortage of refinery capacity in the United States even if the hurricane were to damage one of the refineries.'

The storm was on Sunday expected to avoid most of the offshore production areas in the Gulf and instead strike the Gulf Coast of Florida on Tuesday or Wednesday, the U.S. National Hurricane Center forecast.

Some computer models, however, predict it may enter eastern Gulf of production areas before making landfall on the coast of Alabama or Mississippi.

Supply concerns in other regions also failed to provide support for the market.

BP Plc said exports of Azeri oil by rail to Georgia had stopped due to 'damage' to a railway line in Georgia.

Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11, as growing global economic problems and high fuel prices weigh on demand.

Kemp said there was still a lot of selling interests in the market with some institutional investors liquidating positions and some hedge funds turning aggressively short.

Worsening economic outlook suggests oil prices may fall further, the Centre for Global Energy Studies said its Monthly report on Monday.

'But OPEC, whose members are due to meet in early September, may act to prevent them from falling too far,' it added.

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